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Does Foreign Aid Create Dependency States?

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Does Aid to Foreign Countries Create Dependency States?

A broad shouldered German girl sat across a table from me at the Finca Tatin in the eastern jungle of Guatemala. “I am a foreign observer,” she stated proudly.

“What do you observe?” I had to ask.

“I am protecting political activists from the Guatemalan government, and make sure they do not get assassinated.”

I had my doubts. This German girl may have been relatively big boned and large in stature in comparison with the average Guatemala, but I found it difficult to believe that — even with her freshly issued uni degree in political science — she could protect anybody from the government of any country.

“How do you protect these people?” I asked, not bothering to hide my skepticism.

“Look,” the German girls turned to me with complete seriousness, “my country gives a lot of money to Guatemala, and if they kill these people they won’t give money any more.”

In a sudden flash foreign aid now made complete sense to me.

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I walk through the streets of Central America — or any other country in the tropics for that matter — and I see various construction projects here and there. Invariably, there will be a large sign saying what the project is, how much it costs, and who funded it. More often than not, the funds for these social works projects come from countries very far away, and very far removed from the the location of the construction.

Why are Germany, Japan, Italy, the USA, and Canada paying for bridges, roads, and schools in Guatemala, Nicaragua, El Salvador etc . . ?

Why are my parents in Western New York paying to have a road repaved in Honduras?

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The only solid criteria which divides a first world country from a third world one is that in 100% of the cases first world countries give aid and third world countries receive it. A new terminology is needed here, and, as was proposed in the comments of What do you call a third world country?, I will refer to the countries on each side of the world economic divide respectively as “donor” or “receiver” nations.

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My atlas of Central America has all of the countries staked out in their own color, they all have their own borders, their own boundaries, they are each their own geographic entity. They appear to be autonomous. But many do not seem to meet the basic criteria for political autonomy; rather, many of these countries are, more or less, dependency states — they take aid from richer countries in exchange for adopting policies that run flush with those of their benefactors. If the country steps out of line, their aid is cut until they fall back in step.

Central America

So, in this sense, are the receiver countries sovereign nations or they are dependency states, masked political territories of richer and more powerful nations?

I fear that many receiver countries of the world are up for sale to the highest bidder, they will mimic the policies of the country who gives it the most money. If this means keeping political activists alive, then so be it; if this means allowing Canadian oil companies to Swiss cheese their countryside, then that’s the terms of the engagement. You don’t bite the hand that feeds, you don’t cut off the economic lines which keep your country stabilized. If the USA continues pumping aid into a particular region of the world, then US policy will be supported; if the Middle East steps up their funding, then the region will bow to their influence.

Why are my parents paying for bridges in Guatemala?

War is not fashionable anymore. With the communication technology that the people of the world now have at their disposal, many of those covert wars that the USA once wrought all through regions like Central America are a thing of the past. Now, the dominant countries of the world maintain the status quo not through overthrowing dictators, sending in troops, preparing the civilians to revolt, but through supporting the day to day operations of a given country through foreign aid. Soon enough, the country depends on this aid to continue functioning, and then they are stuck. Like a drug dealer who gives out free samples to hook their customers on their product, aid streams into receiver countries, is used, and then relied upon — as the receiver country becomes a dependency state.

Or perhaps now in this age of global capital, all countries are connected in a web of mutual dependence. Central America relies on the USA and Western Europe to build its roads, bridges, and pay its state employees, and the donor countries receive cheaper manufactured products, natural resources, and a sense of security from having solid ties with many other countries in the world which depend on their handouts (i.e. are on their team).

I do not believe that much in politics is provided as charity, there are reasons that rich countries support poorer ones that go far beyond benevolence. The donor countries are paying for something, and they are receiving it in bulk: economic and political influence over vast swaths of the globe. The teams are being selected, the lines of political association go beyond the lines on the map, the reigns of global influence are falling to a few select geographic powers. Although my map shows me a kaleidoscope of colors and countries, many of these differentiations — as far as geo-politics are concerned — are moot points.

Unstable countries are rarely fertile ground for business. Perhaps it is far more economically beneficial for donor countries to function in a world that is relatively stable — so they pay for bridges, roads, schools, and other social organizations rather than bombs.

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What is dependency theory?

The premises of dependency theory are that:

  1. Poor nations provide natural resources, cheap labor, a destination for obsolete technology, and markets for developed nations, without which the latter could not have the standard of living they enjoy.
  2. Wealthy nations actively perpetuate a state of dependence by various means. This influence may be multifaceted, involving economics, media control, politics, banking and finance, education, culture, sport, and all aspects of human resource development (including recruitment and training of workers).
  3. Wealthy nations actively counter attempts by dependent nations to resist their influences by means of economic sanctions and/or the use of military force.

Dependency theory states that the poverty of the countries in the periphery is not because they are not integrated into the world system, or not ‘fully’ integrated as is often argued by free market economists, but because of how they are integrated into the system.

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I stand on neither side of this debate, I just record my impressions of the world as I move through it. On the one side, donor countries benefit greatly from having receiver countries pledging their allegiance, their cheap labor, and natural resources while the receiver country also benefits from the development, the public resource work, and the money that comes in from aid.

I do not believe that this is a win-win situation — geo-politics is never so cut, dry, and so simple — but I also believe that this is not the winner-loser dichotomy that many liberal theorist claimed it would be. In point, the “developing” world is growing richer and the standard of living is rising materially, economically, and socially. I once called globalization a race to the bottom, another way for the rich countries to exploit the poor, and at one time this may have been true. But the residual effects of globalization are kicking in, and as I watch a middle class that is ballooning throughout the “developing” world I cannot say that the dependency state structure has been as monstrous as I once predicted it would be.

Globalization is now nothing new, its process is maturing. The standard of living in donor countries is falling and in receiver countries it is rising. I do not foresee some kind of happy world ending where everyone becomes each other’s economic equals and the entire planet is one joyful plane of commerce, but the general economic status of the planet on the whole is far higher than it was when I began traveling nearly twelve years ago.

So are the receiver countries of the planet dependency states?

Of course they are. But all countries are now dependent on many others whether they are donors or receivers: there is no such thing as autonomy or sovereignty for any country any more.

The political world is growing  together, but will it soon all break apart?

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Filed under: Central America, Politics, Travel Philosophy

About the Author:

Wade Shepard is the founder and editor of Vagabond Journey. He has been traveling the world since 1999, through 76 countries. He is the author of the book, Ghost Cities of China, and contributes to Forbes, The Diplomat, the South China Morning Post, and other publications. has written 3053 posts on Vagabond Journey. Contact the author.

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